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Management of Financial Institutions

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Management of Financial Institutions - MGT 604
VU
Lecture # 8
STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS (Contd.)
Islamic Banking Department
Islamic Banking Department was established on 15th September, 2003 and has been
entrusted with the huge task of promoting & developing the Shariah Compliant Islamic
Banking as a parallel and compatible banking system in the country.
State Bank of Pakistan wants to develop a progressive and sound Islamic banking
system that is in line and compatible with the global financial sector, providing innovative
Shariah compliant products and services so as to achieve equitable economic growth.
One of the biggest challenges being faced by this growing industry is the dearth of
professional Islamic Bankers and capacity building in this regard is one of the top most
priorities for the promotion of Islamic Banking.
In order to play our regulatory and supervisory role more efficiently we are working
on the areas like Risk Management, Corporate Governance, Prudential Regulations,
Accounting & Shariah Standards etc. regarding Islamic Banking
Islamic Banking Department consists of following four divisions:
1. Policy Division
2. Shariah Compliance Division
3. Business Support Division
4. Shariah Board Secretariat
Islamic Banking is one of the emerging field in global financial market, having tremendous
potential and growing at a very fast pace all around the world.
Domestic Market & Monetary Management Department
DMMMD is a newly constituted department of SBP. The idea of constitution of this
department was to combine FX and money market activities under one roof, hence
Securities department taking care of money market activities and Dealing room taking care
of FX market activities were merged together on February 17, 2000.
Main Objectives
1.
Monetary Operations.
2.
Raising short term and long-term domestic debts for the Government.
3.
Management of Government Debts
4.
Providing funds to the financial institutions as lender of last resort.
5.
Monitoring of money and Foreign Exchange market activities.
6.
Intervention in the Foreign Exchange market.
7.
Reserve Management.
8.
The Primary functions of Domestic Market & Monetary Management Department fall
into the following categories.
1. Exchange Rate Policy Management
Stable Exchange rates and Forward Premiums at appropriate/ sustainable levels
Sale & Purchase of third currencies at optimum prices
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Management of Financial Institutions - MGT 604
VU
Smooth & sufficiently liquid Foreign Exchange Market
Optimal accumulation of Foreign Exchange Reserves and Forward Portfolio.
2. Monetary Policy Implementation.
Maintenance of stable interest rates in inter-bank money market through proactive
management of Money Market liquidity.
Raising short-term government debt and developing yield curve through auction of
Market treasury bills.
Proactive management of Money Market Liquidity through Open Market Operations.
Providing liquidity to the market through SBP 3 day's repo facility.
3. Reserve Management
Optimal utilization of Reserve Portfolio and maximum returns on investment of
surplus reserves. Hiring of investment consultant & Fund Managers for optimizing returns.
4. Debt Management.
a) Domestic Debt
Developing the markets for government securities.
Coordination with monetary and Fiscal Policies.
Raising short term and long term domestic debt for the government.
Data base management of permanent and floating debts.
b) External Debt
Monitoring and ensuring prompt payment of external debt installments through State
Bank of Pakistan and commercial banks.
To generate reports on external debt, connectivity of Debt Management and
Financial Analysis System have been established between Economic Affairs Division &
SBP.
Structure of the Department
a.
Local Foreign Exchange Division.
b.
Local Money Market Division.
c.
In house Reserve Management Division.
d.
Outsourcing Reserve Management Division.
e.
Government Securities Division.
f.
Debt Management Division.
g.
General Division.
Research Department
Research Department assumes an important role by providing key inputs for economic
policy formulation through its analytical reviews and research work. Clearly, superior
analysis of economic policies would be reflected in sounder macroeconomic management
by the central bank and, in turn, the evolving structure of monetary and financial system
would be more stable, and resilient against internal and external shocks. Thus the Research
Department is expected to contribute significantly towards the main objectives of the State
Bank of Pakistan.
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Management of Financial Institutions - MGT 604
VU
Finance Department SBP
Functions of Finance Department
1.  Maintenance of books of accounts and preparation of financial statements of the Bank
in accordance with the International Accounting Standard, as adopted by the Bank.
2.  Coordination and facilitation for Business planning and budgeting function in the Bank
and periodic reporting to the management and to the Board.
3.  Management of Federal, Provincial, and District Governments Accounts. Policy &
operations related coordination Govt. agencies.
4.  Maintenance of foreign currency accounts/ investments and execution of International
payments and receipts.
5.  Maintenance of accounts relating to International Organizations and Donor Agencies
like International Monitoring Fund, Asian Development Bank, Asian Clearing Union etc
6.  Currency issuance and its overall management.
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Table of Contents:
  1. Financial Environment & Role of Financial Institutions:FINANCIAL MARKETS &INSTITUTIONS
  2. FINANCIAL INSTITUTIONS:Non Banking Financial Companies
  3. CENTRAL BANK:Activities and responsibilities, Interest Rate Interventions
  4. POLICY INSTRUMENTS:Open Market Operations, Capital Requirements
  5. BALANCE OF TRADE:Balance of Payments Equilibrium, Public Policy and Financial Stability
  6. STATE BANK OF PAKISTAN:History, Regulation of Liquidity, Departments
  7. STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS:Banking Inspection Department
  8. STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS (Contd.):Debt Management
  9. STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS (Contd.):Training Programs by SBP
  10. STATE BANK OF PAKISTAN - VARIOUS DEPARTMENTS (Contd.):Human Resources Department
  11. MAJOR DRIVERS OF FINANCIAL INDUSTRY:GLOBAL FINANCIAL SYSTEM, The World Bank
  12. INTERNATIONAL FINANCIAL INSTITUTIONS:ADB Projects in Pakistan, Paris Club
  13. PAKISTAN ECONOMIC AID & DEBT:Macroeconomic Stability, Strengthening Institutions
  14. INCREASING FOREIGN DIRECT INVESTMENT:Industrial Sector, Managing the Debt
  15. ROLE OF COMMERCIAL BANKS:Services Typically Offered by Banks, Types of banks
  16. ROLE OF COMMERCIAL BANKS:Types of investment banks, The Management of the Banks
  17. ROLE OF COMMERCIAL BANKS:Public perceptions of banks, Capital adequacy, Liquidity
  18. ROLE OF COMMERCIAL BANKS:Problem bank management, BANKING SECTOR REFORMS
  19. ROLE OF COMMERCIAL BANKING:Private Deposit Insurance,
  20. BRANCH BANKING IN PAKISTAN:Remittances, Online Fund Transfer
  21. ROLE OF COMMERCIAL BANKS IN MICRO FINANCE SECTOR
  22. Mutual funds:Types of international mutual funds, Mutual funds vs. other investments
  23. Mutual Funds:Criticism of managed mutual funds, Money Market Fund
  24. Mutual Funds:Balanced Funds, Growth Funds, Specialized Funds, Measuring Risks
  25. Mutual Funds:Cost of Ownership, Redemption Fee, Reports to Shareholders
  26. Mutual Funds:Internet Fraud, The Pyramid Scheme, How to Avoid Investment Fraud
  27. Mutual Funds:Investing In International Mutual Funds, How to Pre-Select a Mutual Fund
  28. Role of Investment Banks:Recent evolution of the business, Possible conflicts of interest
  29. Letter of Credit:Elements of a Letter of Credit, Commercial Invoice, Tips for Exporters
  30. Letter of Credit and International Trade:Terminology, Risks in International Trade
  31. Foreign Exchange & Financial Institutions:Investment management firms, Exchange Traded Fund
  32. Foreign Exchange:Factors affecting currency trading, Economic conditions include
  33. Leasing Companies:Basic Purpose of Leasing, Technological Benefits
  34. The Leasing Sector in Pakistan and its Role in Capital Investment
  35. Role of Insurance Companies:Indemnification, Insurer’s business model
  36. Role of Insurance Companies:Life insurance and saving
  37. Role of financial Institutions in Agriculture Sector:What is “Revolving Credit Scheme”?
  38. Agriculture Sector and Financial Institutions of Pakistan:What is SMEs
  39. Can Government of Pakistan Lay a Pivotal Role in this Sector?:Business Environment
  40. Financial Crimes:Process of Money Laundering, Terrorist Financing
  41. DFIs & Risk Management:Managing Credit Risk, Managing Operational Risk
  42. Banking Fraud & Misleading Activities:Rogue Traders, Uninsured Deposits
  43. The Collapse of ENRON:Auditing Issues, Corporate Governance Issues, Corrective Actions
  44. Classic Financial Scandals:Corruption, Discovery, Black Wednesday
  45. RECAP:FINANCIAL INSTITUTIONS, CENTRAL BANK,